China's Didi Kuaidi Plans Expansion, Says It Has Broken Even In Over 100 Chinese Cities

China’s largest ride-hailing company, Didi Kuaidi, said it has broken even in almost half of the cities it currently operates, as the company seeks to enlarge its presence in China.

The company, backed by Chinese e-commerce powerhouse
Alibaba and gaming giant Tencent, said its subsidy payments are only a quarter of what its closest competitor spends.

Didi is battling with Uber Technologies to attract more drivers and passengers. The company, which in September raised $3 billion from investors including the state-run China Investment Corp and insurance company Ping An Ventures, now has seven business lines including bus rides, express car services and a social ridesharing network called Hitch.

A smartphone showing the Didi app (Photo credit: Getty Images)

The company says it now operates in 259 cities, with plans to expand into 400 cities by end of February next year. Uber currently operates in about 20 Chinese cities and has plans to increase that number to 100 next year.

Didi currently has about 83% of China’s private-car hailing sector, while Uber is a distant second with 16.2%, according to Beijing-based research group Analysys International.

“Our platform is big, so drivers can keep receiving orders,” Stephen Zhu, vice president of corporate strategy of Didi, said at a press briefing today. “We don’t need to pay a lot in subsidies.”

Didi forecasts better efficiency in the use of funds as a period of “irrational spending” by its top competitor nears an end. Both companies have spent aggressively in driver bonuses and passenger coupons to increase their market share. Uber alone has invested more than $1 billion in China, which is expected to surpass the U.S. to become the company’s biggest market.

But it said profit is not a priority. “Our goal is serving China’s 800 million urban residents. We are currently focusing on scale and user experience rather than making money.”

The company also says it is optimistic of China’s coming regulatory guidelines, although the country’s first draft regulation published in October is more stringent than expected. Proposed rules include register private cars as taxis, sign labor contracts with drivers and insure passengers.

“In our view, China supports shared economy,” Zhu said. “ What our company is doing is in line with the country’s original intention. We will keep communicating with authorities at the Ministry of Transportation.”